jackyboy17
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I'm currently revising for edexcel paper 3 and a 25 marker asks for the macro and micro effects of negative externalities in large infrastructure projects. For micro i simply talked about negative externalities in production leading to market failure and used the diagram but i can't think of any macro effects that i can talk about in depth? I was thinking talking about not operating on the boundary of the PPF as the economy is inefficient but don't really know how to explain it?
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dan2808
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(Original post by jackyboy17)
I'm currently revising for edexcel paper 3 and a 25 marker asks for the macro and micro effects of negative externalities in large infrastructure projects. For micro i simply talked about negative externalities in production leading to market failure and used the diagram but i can't think of any macro effects that i can talk about in depth? I was thinking talking about not operating on the boundary of the PPF as the economy is inefficient but don't really know how to explain it?
I am also revising for it mate! Firstly i think the largest question we get is a 20 marker! The only thing i can think about is linking it to AD and AS diagram.

This may be a bit indirect but.... negative externalities on the NHS from the pollution related illnesses from the shipping, trucks and machinery used may cause an increase in income tax to cover the increasing costs, meaning less disposable income and therefore a reduction in AD

However, i dont know if that would be appropriate because it is very indirect

Also, you could say as an argument that there would be a multiplier effect, increasing AD, due to job creation from the building and maintenance of the dams. potentially?

Hope this helps and if not i hope it stimulates some ideas
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Mo98
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(Original post by jackyboy17)
I'm currently revising for edexcel paper 3 and a 25 marker asks for the macro and micro effects of negative externalities in large infrastructure projects. For micro i simply talked about negative externalities in production leading to market failure and used the diagram but i can't think of any macro effects that i can talk about in depth? I was thinking talking about not operating on the boundary of the PPF as the economy is inefficient but don't really know how to explain it?
large capital intensive infrastructure projects can lead to positive accelerator effects, can lead to capital deepening (more micro), can lead to more jobs although at the expense of air pollution from building---> may reduce hysterisis, reduced welfare payments allows the expansionary fiscal contractionism to occur, whereby there is more capacity for extra funds available for private sector firms as opposed to public ( you can use your ppf diagram here); these are just few issues which can be analysed to depth, you can even go down a simpler route--> capital intensive projects --> promotes eco development (depends on the country in question) --> may lead to higher living standards---> rising hdi even positive multiplier effects,
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